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AUDIENCE GROWS, REVENUE DECLINES AT CLEAR CHANNEL

Radio Giants Shifts Advertisers From 60- to 30-Second Ads

NEW YORK (AdAge.com) -- A week after Arbitron reported a 14.5% hike in time spent listening to Clear Channel’s major-market stations, the radio giant announced a 6.5% drop in second-quarter radio revenue, both likely a response to its much-publicized commercial clutter-cutting campaign that encourages marketers to cut 60-second spots in half.

Clear Channel's attempt to air mostly the 30-second ads is moving slower than wanted -- and may have hurt quarterly revenues.

Building a new marketplace
“We are building a new 30-second marketplace, which continues to move forward, albeit slower than we would hope,” Clear Channel Communications President-CEO Mark Mays said during a second-quarter earnings call. Regardless, “our clutter reduction program lays the foundation for the future of Clear Channel Radio.”

By the end of second-quarter, 25% to 30% of the radio group’s total commercial minutes were 30-second spots.

Yet the answer to Less Is More’s financial success -- Can Clear Channel charge more for a less cluttered environment? -- lies less with Clear Channel than it does with its competitors, most of whom notched small second-quarter increases.

Infinity Broadcasting grew 1%, Citadel Broadcasting’s same station revenue grew 2% and Entercom and Cumulus, two companies that have also embraced 30-second ads, increased 4% and 1.3%, respectively.

Money moves to competitors
“There are advertisers who just won’t be pushed into a 30-second spot and, because Clear Channel now has fewer of those, that money is moving to competitors,” said Laura Martin, senior media analyst at Soleil/Media Metrics. “It’s a competitive world and competitors are then saying ‘Hey, stay with us.’”

In markets where more than one radio company had constricted ad inventory, adjustments came faster. Entercom’s executive vice president and chief financial officer, Stephen Fisher, told analysts in the markets Entercom shares with Clear Channel “the adoption rate for :30s [are] moving along a little bit quicker than in markets where, let’s say, we’re on our own in that regard.”

Clear Channel told analysts average unit rates for 60-second ads were up 10% over first quarter, and average 30-second rates were up 18%.

National radio networks
Meanwhile, Cumulus suffered a revenue blow as its largest advertiser, Home Depot, moved its radio advertising from spot (or local) to network -- raising the question of whether national advertisers, as they become more comfortable with 30-second ads, will move their money to network radio, where the shorter commecials are plentiful and often less expensive.